15 April 2016

A Modest Proposal For Health Care Economics

A committee in the Colorado House of Representatives has passed a bill, on a narrow party line vote, that would require stand alone ERs to disclose their charges so that people utilizing a stand alone ER as opposed to an urgent care facility where charges are much lower for the same treatment, make an informed choice.

I would like to see a law that would make disclosure of all health care provider charges with and without insurance, before providing treatment, and condition precedent to collection of such charges.

There could be an exception if the patient was incapable due to a health condition of comprehending the charges and there was no other responsible person to whom disclosure could be made who could be located before treatment was necessary, in which case only the average amount paid for insured patients could be charged.

One of the biggest problems with health care economics is that there is rarely meaningful disclosure of prices in the industry, which renders impotent the market forces that usually control prices through competition. There is really no other industry in the U.S. economy that I can think of which operates in this way (e.g. while lawyers aren't required to provide firm estimates of the total charges in advance, they are at least required to disclose their hourly rates and any standard additional charges to clients in advance as a matter of professional ethics and are also subject to reasonableness requirements that are not infrequently enforce by the courts).

This consumer protection reform would be a good first step towards putting the health care industry on an economic footing that even remotely resembles a rational one. As it is, there is no real rhyme or reason for the charges for particular health care services in the absence of binding health insurance contracts between insurance companies and their provider networks.